Topic: Asset Bubbles and Foreign Interest Rate Shocks

Speaker: Pengfei Wang, Professor, Department of Economics, The Hong Kong University of Science and Technology.

Date: November 16th (Wednesday.)

Time: 2:30-4:00pm

Location: Building 4, Room 101

Language: English

Abstract:

We provide an infinite-horizon general equilibrium model of a small open economy with both domestic and international financial market frictions. Firms face credit constraints and use a bubble asset (land) as collateral to borrow. A land bubble can provide liquidity and relax credit constraints. Low foreign interest rates are conducive to bubble formation. A rise in foreign interest rate can cause the collapse of the asset bubble and a sudden stop. Asset bubbles provide an important amplification mechanism.

About the speaker:

Pengfei Wang is currently Professor at Hong Kong University of Science and Technology. He joined HKUST in 2007 after obtained his Ph.D degree in Economics at Cornell. His research interest lies in the areas of macroeconomics, financial economics and monetary economics. Professor Wang has published extensively in top journals such as Econometrica, American Economic Review, Journal of Economic Theory, Journal of Monetary Economics, American Economic Journal: Macroeconomics, Review of Economic Dynamics, and Journal of Economic Dynamics and Control.